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TMI Blog2021 (6) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... are part of the same property, the rate at which it is sold by the assessee is under valued. Rejecting the various explanations given by the assessee, the Assessing Officer made addition of Rs. 45.50lakhs being the difference between the value of 12.5% share at Rs. 1.20 crore and the sale value of Rs. 74.50 lakhs. 2.1 The Assessing Officer similarly noted that during the year the assessee sold another property at 264, Industrial Area, Phase III, Okhla, New Delhi at Rs. 39.30 crores. But, in computation the sale consideration of this property is taken at Rs. 37,59,20,845/-. On being asked by the Assessing Officer, it was submitted that an amount of Rs. 1.50 crores was forfeited by the buyer M/s Hero Corporate Services Ltd. and that Rs. 20,79,155/- was paid as brokerage on the sale of the property. The Assessing Officer noted that in reply to requisition u/s 133(6), the buyer M/s Hero Corporate Services Ltd., submitted that an amount of Rs. 1,29,51,720/- is still payable to the assessee. He, therefore, rejected the claim of forfeiture of an amount of Rs. 1.30 crores and added the same to the total income. The other addition of Rs. 95,697/- is not in dispute before us, therefore, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as merely adopted the valuation of the property which has been declared by Sh Aniljit Singh in purchase of other floor of the same property. There is a stark difference in the value adopted for the same property. How could one property be valued at Rs. 74.50 lac when the same property has been valued by the third party at RsT.20 crore. The Assessing Officer had a very strong case and he rightly held that the property has been transferred in a grossly under valued consideration. The mere fact that the purchaser was the son of the appellant does not really change the nature of transaction. The other argument of the appellant that the consideration over and above sale value (declared) may be considered as gift from mother to son. However, I am afraid that such argument cannot be accepted at this stage. It is open to the appellant to gift any property to anybody the department has nothing in favour or against the appellant. However, the transfer of property should take place as per the law prevalent at that stage. Whether there was a gift from mother to son or not should have been declared by the appellant. The appellant cannot and should not expect the appellate authority to draw co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of Rs. 1.30 Crores was not to be paid by the Appellant to the vendee. 1.7 Therefore he contended that the Appellant cannot be taxed or an amount he is not entitled to receive. 1.8 He further argued that the account statement received from Hero Corporate Service Ltd. by the Assessing Officer under section 133(6) of the Income Tax Act, 1961 showing Rs. 1,29,51,720/- payable to the Appellant cannot be used as evidence against the assessee since no opportunity to rebut the same has been given to the Appellant and no chance to cross examine Hero Corporate Service Ltd. has being given. Accordingly, this amount Rs. 1.30 Crores could not form part of Capital Gains assessed by the learning Assessing Officer." 6. However, the ld.CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the addition of Rs. 1.30 crores made by the AO by observing as under:- "I have considered all the facts and circumstances of the case. There is no dispute to the fact that an amount of Rs. 1,29,51,720/- is still outstanding in the books of accounts of M/s Hero Corporate Service Ltd which is payable to the appellant. As far as the agreement to sell is concerned, there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- on account of alleged under valuation, without appreciating that assessee has declared consideration as per sale deed, which is as per prevalent circle rates prescribed by competent authority, on mere basis of assumptions and presumptions, dehors provisions of section 48 & 50C of Income Tax Act,1961. 2.1. That on the facts and in the circumstances of the case and in law, Ld. CITA erred in confirming the addition of Rs. 45,50,000/- on account of alleged under valuation without any reference to DVO. 3. That on the facts and in the circumstances of the case and in law, the Ld. CITA erred in sustaining the addition of Rs. 1,30,00,000/-, which amount has never been paid by the buyer to the assessee, evident from (a) Reply of Buyer dated 29.05.2015 addressed to assessee A advocate, (b) Letter dated 20.12.2011 describing retention of said amount, (c) Contents of sale deed dated 20.12.2011, (d) Affidavit of the assessee dated 02.01.2017, all these documents established that said amount has remained unaccrued, non crystallized, inchoate, thus cannot be taxed on basis of real income theory. 3.1. That on the facts and in the circumstances of the case and in law, the Ld. CITA erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration more than the apparent consideration. No material or evidence was brought on record by the AO that the assessee has received something more than the consideration mentioned in the sale deed. He submitted that even otherwise, if it is treated that the property has been transferred for inadequate consideration that will tantamount to be the gift made by the mother to her son and cannot be assessed u/s 56(vii) of the Act. It was accordingly argued that since the addition has been made on the basis of assumption and presumption, therefore, the addition so made by the AO and sustained by the CIT(A) should be deleted. 11. The ld. DR, on the other hand, heavily relied on the order of the AO and the CIT(A). He submitted that when the son of the assessee has purchased 25% of the property from his uncle at Rs. 2.40 crores. Therefore, it is not conceivable that the assessee would have sold her 12.5% share in the same building at Rs. 74,50,000/- as against Rs. 1,20,00,000/-. He accordingly submitted that the order of the CIT(A) being a reasoned one, the same should be upheld and the ground raised by the assessee on this issue should be dismissed. 12. We have considered the riv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The AO has no material on record or at his possession to show that the assessee has, in fact received more than what is mentioned in the sale deed. The matter has also not been referred to the DVO. There may be so many reasons for two different rates in the same property such as on account of location of the property, willingness of the seller to sell the property, etc. When a person is not willing to sell the property, but, the buyer is determined to buy the property for becoming the owner of an entire floor, he may have to make some higher payment to tempt the seller to sell the property. In such type of cases it cannot be said that the other sellers must have received payments at the same rate. Since, in the instant case, the assessee has sold her 12.5% share in the property to her son at the prevailing circle rate and there is no evidence on record that the assessee has received something more than the amount mentioned in the sale deed and there is no addition in the hands of the son of the assessee on account of such extra payment made for purchase of the property, therefore, the addition made by the AO on presumption and surmises which has been sustained by the CIT(A), in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y upto a sum of Rs. 1.20 crores which was received by her. For the remaining Rs. 1.30 crores, she could not discharge the obligations and, therefore, the same was not received. He submitted that it is not the case of the Revenue that the whole of the consideration was for the transfer of the property, but, there was certain embargo on the property. Therefore, for removing the embargo, the separate consideration is mentioned in the sale deed as agreed by the seller and the buyer. The said consideration amounting to Rs. 2.50 crores although is the part of full consideration of the transfer of the property, but, it was specifically in respect of certain obligations to be discharged by the assessee which is also apparent from the copy of the letter dated 20th December, 2011, copy of which is placed at pages 5 and 6 of the paper book. Since the assessee could not fulfill the obligations and the amount was forfeited by the party, therefore, the sale consideration to the extent the obligations are not performed cannot be part of the apparent consideration and, therefore, the CIT(A) was not justified in sustaining the addition made by the AO. He accordingly submitted that the addition so m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ehalf of Vendor in terms of Clause 2 on page 5 of Agreement to Sell dated 17.10.2011. 2. Cheque no. 273017, dated 28.10.201 drawn on Axis Bank Ltd., Karol Bagh Branch, New Delhi. 16,00,00,000 Confirming Vendor i.e. Sh. Aniljit Singh acting for and on behalf of Vendor in terms of clause 2 on page S of Agreement to Sell dated 17.10.2011 3. Demand Draft No. 056700, dated 05.12.2011, issued by Axis Bank Ltd. 3,51,84,317 In terms of Letter dated 29.11.2011 from the Vendor and Confirming Vendor, requesting the amount to be paid directly to Reliance Capital Ltd. for release of mortgage. 4. Demand Draft No. 056701, dated 05.12.2011, issued by Axis Bank Ltd. 9,35,658 In terms of Letter dated 29.11.2011 from the Vendor and Confirming Vendor, requesting the amount to be paid directly to Reliance Capital Ltd. for release of mortgage. 5. Demand Draft No. 056702, dated 05.12.2011, issued by Axis Bank Ltd. 4,58,47,505 In terms of Letter dated 29.11.2011 from the Vendor and Confirming Vendor, requesting the amount to be paid directly to Reliance Capital Ltd. for release of mortgage. 6. Retained and deposited Amount 2,50,00,000 Amount retained and deposited at the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount was not received by the assessee due to non-fulfillment of certain obligations and that condition was mentioned in the sale deed itself, therefore, we are of the considered opinion that the CIT(A) was not justified in sustaining the addition made by the AO. 19. So far as the observation of the ld.CIT(A) that non-receipt of amount does not change the character of the receipt is concerned, we find, out of the total consideration of Rs. 39.30 crores, a sum of Rs. 2.50 crores was in respect of certain obligations to be fulfilled by the assessee. In the instant case, the assessee could fulfill obligations only upto Rs. 1.20 crores which was received by her. But, for the remaining Rs. 1.30 crores, the assessee could not discharge the obligationfor which the said amount was not received. We find merit in the submission of the ld. Counsel that it is not a case that the whole of the consideration was for the transfer of the property, but, there were certain embargo on the property. Therefore, for removing the embargo, the separate consideration was mentioned in the sale deed as agreed between the seller and the buyer. The said consideration amounting to Rs. 2.50 crores although is t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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